Helping trustees reduce key person risks

The global pandemic put many business continuity plans to the test, and pushed some beyond their breaking point.

While Covid-19 has now diminished in its impact on day-to-day business, you never know what may lie ahead - pension scheme trustees should now consider taking a step back and think about long-term issues to make sure their business continuity and pension risk management plans are fit for purpose. 

The risk

One ever-present risk is where an individual is appointed to fill a particular role. What happens if they’re unexpectedly unable to work, due to something like a family emergency or ill-health?

Many schemes use an individual as a Pensions Manager and/or Scheme Secretary. Nobody is indispensable but there may be no obvious substitute for such a key individual. If the key person is unavailable to meet their responsibilities, this could lead to delays and extra cost at a time when it’s least needed. 

Our approach to business continuity

Barnett Waddingham has worked for many years with in-house teams to provide business continuity in various areas of pension executive management services. This has included assisting schemes of different sizes to varying extents, from providing minute taking services to taking over a whole secretarial function. In some cases, we’ve stepped into a pension manager’s shoes at short notice because of an unplanned absence, and in others we provide planned business continuity on either a temporary or permanent basis. 

When appointed, we take time to get to know the key individuals, responsibilities, the way the organisation works and the way the scheme operates. We use this information to ensure that the service we provide is tailored specifically to the in-house operations in place. For example, for clients where the payroll is provided in-house, we have put in place a contingency plan to run the payroll in an emergency. 

Our approach in practise

We were appointed to cover an in-house Pension Manager’s absence for an extended period. The Pension Manager was also secretary to the Trustee Board and oversaw the in-house administration team. This meant that continuity of service was vital, from running trustee meetings and overseeing the pension administration delivery to members, to preparing accounts. 

Barnett Waddingham provided a Senior Pension Management Consultant with the knowledge and experience to step into the shoes of the Pensions Manager. Our client was pleased with the service we provided and we built up a significant amount of knowledge relating to the scheme and its operations, so much so that they could see that extending the relationship would lead to significant risk reduction in the scheme. As a result, we are now part of the client’s business continuity plan. 

After the Pension Manager returned, there wasn’t a need for us to be a permanent presence – instead we attend one trustee meeting a year, acting as a secretary for that meeting and taking minutes in place of the Pension Manager. This way we keep up to date with the in-house team, scheme processes, the Trustee Board and other advisers. Keeping familiarity with the scheme in this way provides a benefit to the client – we provide secretarial services rather than simply sit and listen. 

The client has successfully managed some of the risks affecting their scheme by extending our appointment in this way. They have peace of mind that the Pension Manager function could continue seamlessly if for any reason their own Pension Manager was unable to fulfil their role or needed further support, whether for short planned absences such as holidays, or longer unexpected periods of absence. 

Facing a similar challenge?

If you are a trustee and considering how to better manage the long-term business continuity risks to your scheme, get in touch with our team or find out more about the pension risk management expertise we provide.